So far, little attention has been paid to contextual factors shaping loneliness and their interaction with individual characteristics. Moreover, the few existing studies have not included older migrants, identified as a group who are vulnerable to loneliness. This study examined the association between neighbourhood ethnic density (the proportion of own-group residents and the proportion of other ethnic residents in an area) and loneliness among older migrants. Furthermore, we investigated whether local language skills moderated this association. A population-based representative survey (The CHARM study, n = 1082, 57% men, mean age 63.2 years) and postal code area statistics were used to study Russian-speaking migrants aged 50 or older in Finland. The study design and data are hierarchical, with individuals nested in postcode areas. We accounted for this by estimating corresponding mixed models. We used a linear outcome specification and conducted logistic and ordinal robustness checks. After controlling for covariates, we found that ethnic density variables (measured as the proportion of Russian speakers and the proportion of other foreign speakers) were not associated with loneliness. Our interaction results showed that increased own-group ethnic density was associated with a higher level of loneliness among those with good local language skills but not among those with weaker skills. Good local language skills may indicate a stronger orientation towards the mainstream destination society and living in a neighbourhood with a higher concentration of own-language speakers may feel alienating for those who wish to be more included in mainstream society.